The deal must get through a March 2027 trial in the US
UK’s Competition and Markets Authority has approved Paramount’s proposed acquisition of Warner Bros Discovery on the grounds that the merger is unlikely to significantly limit competition in the region.
The body examined submissions and internal commercial and strategy documents provided by Paramount and WBD. It also considered feedback obtained from stakeholders during a consultation and engaged with customers and competitors.
The CMA concluded in its decision that while Paramount and WBD were competitors, “they do not appear closer to each other than to Universal, Disney, or Sony.” Although the merger would make Paramount-WBD the UK’s biggest distributor of theatrical films, the other three studios would provide adequate competition, as would smaller studios.
The body also determined that consumers still had multiple alternatives when it came to linear children’s TV channels, such as free-to-air channels and subscription video on demand featuring content for children. It noted that demand for linear pay-TV children’s channels was low and that the value of such channels for pay-TV providers was dropping; thus, competition was adequate in this area.
The merger would put the streaming services Paramount+, HBO Max, and Discovery+ under one umbrella; nonetheless, the CMA decided that Paramount-WBD would face competition from Netflix, Disney, Apple, and Amazon Prime in this respect. Broadcast video on demand services like BBC iPlayer and ITVX would also provide options for consumers.
Moreover, there would be sufficient competition in the area of audio visual content production and licensing. Thus, the CMA confirmed that the Paramount-WBD would not be subject to a phase 2 investigation pursuant to section 33(1) and 34ZA(2) of the UK’s Enterprise Act 2002
However, the UK approval does not spell victory for the merger just yet. In response to a suit filed last month by 12 US states to block the merger, the presiding judge has scheduled a 12-day trial that will run from March 2-19, 2027.
According to The Hollywood Reporter, the trial will be held from 8:30am to 1:30pm. The final pretrial conference will take place in February, and both parties are expected to complete briefing by the start of April 2027.
Paramount had initially sought for the trial to be held this November while the states pitched April 2027.
“We respect the court’s decision and continue to believe a trial on the merits is the best and most direct way for us to prove what we’ve said from the start – this transaction is lawful, pro-competitive, and raises no antitrust concerns,” said a Paramount spokesperson in a statement published by The Hollywood Reporter. “The lawsuit against us has no basis in fact, economics or antitrust law.”
Having promised to pay WBD shareholders a ticking fee if the merger is not finalized by September 30, Paramount is obligated to fork over ~US$7 million a day to WBD shareholders beginning October 1 until the deal is completed. Moreover, if the deal fails to close by a June 2027 “outside date,” WBD can drop the deal for a US$7 billion regulatory termination fee.
Lawyer Beth Wilkinson heads up Paramount’s legal team, which includes Jeffrey Kessler and Paul Clement. Milbank LLP partners Richard Parker and James Weingarten are on the team representing the US states.
Wilkinson and Weingarten were both involved in Microsoft’s acquisition of Activision Blizzard, which was challenged by the Fair Trade Commission – Wilkinson guided Microsoft to a win in court, while Weingarten was the FTC’s chief trial counsel.
